I am a senior editor at Forbes, covering legal affairs, corporate finance, macroeconomics and the occasional sailing story. I was the Southwest Bureau manager for Forbes in Houston from 1999 to 2003, when I returned home to Connecticut for a Knight fellowship at Yale Law School. Before that I worked for Bloomberg Business News in Houston and the late, great Dallas Times Herald and Houston Post. While I am a Chartered Financial Analyst and have a year of law school under my belt, most of what I know about financial journalism, I learned in Texas.

January Crunch Aside, These Managers Are Bullish On 2014

What December giveth, January taketh away. But there are still plenty of reasons to be positive about investment opportunities this year, from stocks that will capitalize on a growing U.S. economy to municipal bonds, which may be in short supply as insurance companies and other long-term investors increase their holdings.

Below are the best investment ideas for 2014 from a handful of money managers active in different segments of the market. The connecting theme is optimism about the economy and rising purchasing power of consumers worldwide. Recent volatility may have put a damper on such enthusiasm, but that’s also where the buying opportunities come from.

Chung, who oversees about $19 billion in growth-oriented investments at Alger, looks for companies that are in the right segments of the economy with an identifiable catalyst to make their stock price rise. His big themes and some stock picks include:

Alternative investing:Blackstone (BX). A play on recovering markets. Chung likes Its strong business model, increased allocations from institutional investors, and ability to take advantage of depressed prices in Europe/emerging markets.

Technology: Apple (AAPL). Reaccelerating growth after a transition from high growth, good product cycle with iPhone and iPad, new market opportunity with China Mobile deal within the world’s largest cell phone market.

Healthcare: HCA Holdings (HCA). Obamacare is rolling out, exchanges are improving from their poor start, and there are significant benefits to hospitals in increasing covered care and reducing bad debt. The recovering economy will also boost utilization of medical services after years of post-financial crisis decline.

Industrial:Danaher (DHR). Recovering global economy is good for industrials generally. Danaher is a leading industrial company, under-levered, and thus poised to do accretive acquisitions. One of the best management teams in industrials.

After strong stock market gains in 2013, Warne thinks stocks are likely to perform increasingly differently from each other in 2014 based on their fundamentals. So investors need to be more selective and look for value.

Neglected value: Consider stocks that are out of favor but appear well-positioned. EMC Corp (EMC) is poised to benefit from higher spending on corporate information technology. Philip Morris International (PM) is the world’s leading branded tobacco company, growing as incomes rise around the world.

Catalysts for improving performance. Merger and acquisition activity has increased, and other companies are finding value by splitting into different business units. Abbott Labs (ABT) has product and emerging market diversification that could drive long-term earnings growth. Devon Energy (DVN) is shifting its focus toward oil production.

Attractive, high-performance stocks. PACCAR Inc. (PCAR) could benefit from increased demand for heavy trucks. PNC Financial (PNC) (note: Edward Jones has a banking relationship with this firm) is a regional bank that has built up capital and made successful acquisitions, positioning it well for future growth.

2014 could be marked by “The other great rotation” where both pension and insurance companies seek to reduce their exposure in riskier equities in favor of long maturity fixed income bonds to better match their liabilities and add more predictable yield to their portfolios. The potential demand from these large buyers could flatten the yield curve, particularly at the long end of the maturity spectrum.

The best way to capture this dynamic is long dated, high quality municipal bonds. Even though rates may increase, municipal bonds are currently inexpensive vs. history. In fact, long maturity municipals are one of the few laggards in the rally in bond spreads in 2013. While there are headlines around the default of Detroit and concerns over Puerto Rico, the fact is that the default rate on munis remains very low and tax collections are picking up with an improving economy. The historical muni yield of 90% of Treasuries has widened past 100%, meaning they are relatively cheap and could richen closer to historical ratios even as rates rise, offsetting the corrosive effects of higher rates on bond prices.

Data Deluge: A Structural Growth Story. As investors seek to generate growth, technology companies are attractive to a point, but they also display wide cyclicality. By investing in technology companies whose earnings are underpinned by structural growth, such as the undeniably growing data deluge, investors can access long-term growth potential with possibly less volatility.In 2012, approximately 120 million tablets were shipped worldwide. In 2016, this figure is estimated to reach 280 million, more than double 2012. Global e-Commerce sales may surpass $1 trillion in 2016. Technology companies are attractive to a point, but they also display wide cyclicality. By investing in technology companies whose earnings are underpinned by structural growth, such as the undeniably growing data deluge, investors can access long-term growth potential with possibly less volatility. Telecity is a UK-based leader in systems integration, cloud computing and connectivity services. The company enjoys a dominant market share position in Western Europe, where data traffic growth has increased seven-fold since the beginning of the global financial crisis. SAP(SAP) is a Germany-based leader in business management software whose products help unlock the hidden value in its customers’ data by processing and analyzing it faster and more cost effectively. SAP ranked #1 with a 22% market share across business intelligence, analytics and performance management in 2012.

Mass Affluence: Gaining Access To Growth In Emerging Markets: Some key economies are struggling, but favorable demographics and superior growth in certain emerging markets (EM) still provide investors with significant opportunities. One option to access this potential growth is by investing in companies that are domiciled in the developed world, but derive revenue from the EM economies. This is especially true when looking at firms that are positioned to benefit from a growing middle class, a mega-trend that we call Mass Affluence.

Two picks are Diageo (DEO), the world’s largest premium spirits company with brands such as Johnny Walker and Ketel One, estimates that its opportunity in Asia Pacific alone is worth roughly 40% of its sales from Emerging Asia, South America and Africa. And LVMH is the world’s largest luxury consortium, generates about half of its revenue in the eastern part of the world. Since 2009, it has opened 200 stores in Asia (excluding Japan) and posted roughly 20% sales growth per year in the region.

Page and Mortimer look for companies they think have the ability to earn sustained, high return on capital. They believe innovative companies are best placed to achieve this as they are either doing something completely different from everyone else or simply excelling in their market. At the same time, they don’t want to overpay and don’t like chasing growth. Sometimes this has led to consensus plays such as Apple, which they have historically held in the fund, but it also led them to Netflix, where they have earned 10x their initial investment. Here’s what they say about their top picks:

Qualcomm (QCOM) has a great business model that is benefiting from the growth in smartphones and the rollout of 4G networks around the world and have sustained very high return on capital for a decade. The market is currently a bit concerned about slowing growth in smartphone volumes from Apple and Samsung but growth in handsets from the likes of Lenovo and Huawei still looks good. It has a very strong balance sheet with no debt and very modest capex requirements and it also pays a dividend that continues to grow. That is a combination we love. Add to that the fact that it hasn’t traded at a lower P/E multiple in the last 10 years this seems like an attractive entry point with a reasonable margin of safety.

Lenovo (LNVGY), the Hong-Kong listed pc manufacturer which has managed to grow its gross margins in a tough environment for PC notebooks. That takes skill in our opinion. One metric we always like to look at is pre-tax profits to enterprise value and at 12% we thought was attractively valued. The company also looks good value relative to its peer group and historical valuation range. More recently they announced the acquisition of IBM’s server business which will add some diversification to their business model.

Schneider Electric (SBGSY) makes a number of the key components for the smarter distribution and use of electricity. They create components that help to reduce electricity use on the grid as well as providing the components to connect renewable energy sources to that grid. We like the fact they have a global footprint with revenues split fairly evenly between North America, Europe, Asia and Emerging Markets, but as the company is listed in France the valuation is more attractive relative to peers in the US. They are well placed to take advantage of new developments in energy efficiency and distribution.

Pharmaceutical companies are phenomenal innovators. They may seem a bit defensive and boring as an investment at times as the drug development process is so long but they clearly have cutting edge science at the heart of their business models. Many were too frightened to touch pharmaceutical companies as concerns over patents cliffs were really in focus but to the long-term investor with a value discipline they are attractive companies to own. This principle led us to take a position in Gilead (GILD) back in 2010 and it has made a great contribution in the treatment of HIV-positive patients. Its drug Truvada is not only now used in the treatment of HIV positive patients but also as a preventative medicine.

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